In every industry—but particularly the hospitality industry—having data and systems that don’t talk to each other is a major problem:

your POS holds all your sales data

your accounting program holds all your financial data

your inventory app holds all your inventory data

etc, etc.

While some systems claim to do everything, the truth is most try to do it all, but the delivered results are average at best, and poor most often.

That does nothing for you, the client—except add to your aggravation and frustration.

Now, imagine having all your data and systems integrate seamlessly—giving you real-time business info at your fingertips.

That’s why Barmetrix is excited to announce our partnership with MarginEdge— to give our clients a best of breed solution.

Barmetrix and MarginEdge share a common goal of going the extra mile for their clients in the hospitality industry—doing whatever it takes to improve lives and businesses for bar and restaurant operators.

MarginEdge is a software platform started by 2 successful restaurant operators who were sick of the constant headaches that seemed to be just the “cost of doing business” in the industry.

Both longtime restaurant owners and technology entrepreneurs, they understand the business and pain of managing restaurants, and they’re tech savvy, too!

They started MarginEdge with a mission to help restaurant operators focus on the business they love.

By simply taking pictures of their invoices and receipts, restaurant owners and operators get real-time, cloud-based visibility into all areas of their business.

Does your bar or restaurant operation have an inventory program or an ordering program?

Yes! There are vast differences between the two.

Often, people believe they are running an inventory program, or consider both practices one and the same.

But, one will get your variance (or loss) down to less than 3%, the other, on average, will keep you between 15 – 20%.

How to Make More Money in Your Bar Program

First, let’s drill down to the most likely place you’re losing it.

What we know from working with thousands of operators over the last two decades is that bars and restaurants lose tons of money every day.

It’s our goal to help you get those losses under control and maximize your profitability.

The average loss in the hospitality industry is between 15-20%. In comparison, the retail industry has an average loss of 1.44%.

Why?

It’s largely due to the way venues manage their inventories. There are basically two systems used to collect data:

The first is what we’ll call an ordering program, and here’s what it looks like:

Inventory vs Ordering Programs | Barmetrix - YouTube

Ordering Program

Bartender/Manager counts (eye-balls) product

Kegs are sloshed to determine volume

Count noted on spreadsheet

Compare to par guide

Place order

From there, the manager figures out the liquor cost/cost of goods by dividing the cost of product depleted by the product sold.

If that number seems reasonable, it’s back to business as usual. If the liquor cost seems a bit high, there’s scrambling to find the missing product, or figure out what went wrong, and do something—anything to fix it.

*Pro-tip: This method is easily manipulated by staff. It’s a bit like the fox guarding the hen house. Don’t think for a minute that your staff can’t figure out how to get those numbers where they need to be.

The problem is all this looking and scurrying around is done without a compass. All you really know, using an ordering system, is that your cost is high and profits are low—but you’re not quite sure why.

But, there is another way!

Inventory Program

Here’s a shameless plug: Barmetrix is known worldwide as the experts in outsourced liquor inventory control.

That’s where you sit down and design a purpose for your time—instead of falling victim to circumstance, and often, the whims of others. Remember, it’s important to put your time into three distinct categories, in the following order:

Your own personal time

Family obligations

Business opportunities and obligations

It’s a weird thing to get used to for some—putting ourselves first. But it’s critical to maintaining control over your life. Burnout creeps in when people don’t have control; when everyone and everything else tops the list of priorities.

It’s worth repeating—put your oxygen mask on first.

Look at your month, your week, and your day from a 1000-foot view. Know your priorities, and schedule them.

“We are what we repeatedly do. Excellence, then, is not an act, but a habit.”
-Aristotle

② Pace Yourself

There’s a reason the tortoise wins the race.

Success is a marathon—not a sprint.

We coach talented and energetic entrepreneurs who often go after their dreams and ambitions really hard. And while we love and encourage that, if you’re in a high-driving mode of dreaming big and acting big, it’s often a good time to ask, “Man, is this worth it?”

Sometimes we dream big—and in our mind, we’ve got it well thought out, but on paper, it doesn’t really make sense.

And typically when we don’t map it out, we miss a bunch of stuff, and that all starts to have a compounding effect, which drags us down.

If we can stop and take a second to breathe, we sometimes see we’re headed towards an unhealthy place, and might be getting a little ahead of ourselves.

So, when it comes to going after your dreams and aspirations, take it on with the same discipline as you do for your day-to-day or week-to-week scheduling.

When you prioritize the right next steps, you can show up with all the needed time, energy and resources.

Time and time again, we hear people talk about working 14-hour or 16-hour days—but the truth is people are at work for 14 or 16 hours, but they’re not efficiently working that long.

There’s another group of folks—you know them— the ones who go home on the wrong side of the sun.

They’ll celebrate a hard day at work with a few shift drinks, and the next thing you know it’s 3, 4, 5 a.m.—and have to be back at 10 or 11 a.m.

This is their choice.

There’s a tendency to blame that “extra time” on the job— that’s not the jobs fault—that’s a matter of personal discipline and healthy habits.

Pro-Tips:
You don’t have to go home, but you can’t stay here.

I worked with a client who had this problem of people “decompressing” after work, and we put in a rule that said,

“Look, there’s just no more drinking on the job. We don’t want people hanging out at work, but if you really want to hang out with your co-workers and celebrate a hard day’s work—cool, but let’s go do it somewhere else”

After implementing that rule, we found that people chose to go home. There wasn’t enough value in the celebration to take it somewhere else.

In our industry, it becomes really convenient to just hang out. When that happens, people spend too much time at work and that can become unhealthy.

Back-to-back days off.

Of course, you have to consider what your business can tolerate in terms of staffing, but if possible, schedule people for consecutive days off.

A couple of our clients have a mandatory 2-days off rule, and it works well for everyone—staff and ownership.

It’s a great best practice because it allows people to completely disengage from the business, and they’re the less inclined to want to “get that time back” on the clock.

When people are healthy away from work (have time to rest & recharge), they’re more likely to be healthy (productive) at work.

Ultimately, what we want for ourselves and for employees is to avoid burnout, so we can

The following guest post is from Frankie Merriam, Managing Partner at Olde Towne Tavern near Atlanta.
Lost Opportunity: To Comp or Not to Comp—That is the Question

You’re Doing It Wrong!

At least that’s what my mentors told me when I was trying to grasp the concept of inventory and menu costing years ago.

They spoke to me about seeing things from a different perspective.

Bar owners and operators have similar concerns when it comes to analyzing operating costs:

Do we add comps into sales when figuring out our true cost percentage?

Do we just take raw costs versus raw sales straight from the Profit & Loss Statement?

Do we use an adjusted inventory method that takes goods on hand at the beginning and ending of the inventory period into account to get our true cost?

Those are all great questions to consider, but before you get to the number-crunching, take a look at what’s actually going on when you give away your inventory.

Mind Your P’s & Q’s (Pints & Quarts)

When looking at your daily, weekly, monthly, and yearly costs, you must make a decision about the target cost range for your operation to survive and be profitable.

For some, bar costs might be 15%, others could be 25%.

Venues might set targets for different categories, such as:

liquor 15%

beer 20%

wine 25%

Whatever the case may be, each business needs to identify this before looking at inventory or costing.

For easy math purposes, let’s use the figure of 20% cost. That means for a $5 cocktail our cost is $1. A $10 martini would have a $2 cost, and so on.

Simple enough, right?

This is where I look at things differently when it comes to inventory and comping drinks at the bar.

I look at LOST OPPORTUNITY COSTS.

The True Cost of Comping Drinks

By comping a drink, what have I actually lost in potential revenue?

To illustrate:
Sandra is a very good customer and loves her martinis each day. So on Friday, the bartender comps one for her. This is great for customer morale and loyalty…not arguing that.

Most managers would say, “Meh, what the hell? It only costs me $2. Why not?”

Here’s why:

The “free” martini you served didn’t merely cost the business $2 for the cost of the liquor. You also lost the $10 the customer would have paid you for the drink.

So the total cost to your bottom line is $12.

Now, apply the same understanding to your actual costs when bartenders slide their friends a beer or two or go a little heavy on the pour.

You could even consider this when talking to your staff about damaged goods, like a few broken bottles in a storage area. Having an understanding of what a busted bottle of Belvedere actually costs a business in sales will be an eye-opener!

Considering only the wholesale cost of a product as a loss isn’t an accurate representation.

Get in the habit of seeing lost dollars when:

Comping food and drinks for guests

Comping staff food and beverages

Over-pouring, spillage, and waste

This isn’t intended to suggest you should eliminate comps; they have a place in many situations.

It’s meant to encourage you to see things in a different light.

Finally, consider this:

What could you have purchased or financed with the cash—had you not experienced the lost sales?

EDITOR’S NOTE: Thanks to Frankie Merriam for this guest post. If you’re in the greater Atlanta area, stop by and see him!

Warning signs of burnout are all around us. We have to be really careful not to miss them—or worse—ignore them when they show up in ourselves or members of our team.

Often we see signs of burnout in our top performers—the people we don’t want to lose.

Of course, anyone can get burned-out, especially those of us who work in high-energy environments. But for the high-achievers—your very best employees—the chances are even greater.

Burnout in the Hospitality Industry: Part 2 Do You Know the Warning Signs? - YouTube

What are the Warning Signs of Burnout

Although there are many, let’s talk today about three that we find are significant.

① Pre-Shift Fatigue

We’re not talking about being physically spent after a busy shift, working a double or even a 65-hour work week. Those folks are exhausted—and should be!

This is not your normal, “I-need-a-cup-of-coffee-and-I-need-it-now” kind of fatigue.

When people show up for work, pre-shift, and they’re already emotionally drained—that’s a big warning sign.

Your rock-star employees see themselves as problem solvers, they’re driven to achieve, so they’re not likely to acknowledge that they’re experiencing burnout—let alone ask for help.

Look and listen for signs of:

Lack of sleep

Changes in eating habits

Lack of motivation

② The Give-a-Shit Factor Takes a Nose Dive

This one is easy to spot—but is often mis-identified, or “misdiagnosed”.

When the normally engaged and productive folks just don’t give a shit anymore—Houston, we have a problem.

③ Molehills to Mountains

The third warning sign of work-related burnout is a change in emotional reactions. It’s kind of the opposite of the Give-a-Shit Factor, in that now, what would seemingly be a small detail, is perceived and reacted to like a major event.

An Ounce of Prevention

Sometimes we can’t actually prevent burnout, but we can be proactive in identifying it, and making genuine efforts to curtail it.

Engagement is the key.

Stay engaged with your team, and stay with us for Part 3 of the series, where we’ll dive into what to do once we’ve seen the warning signs.

Running a bar or restaurant is HARD. It’s a 365-day-a-year operation, and if you’re not careful and deliberate with your time, you’ll spend all of it doing the “have to’s” and no time doing the “want to’s”.

In a new series, kicking off today, Dave Nitzel shares simple and effective ways you can reduce burnout for yourself and for your team.

Common Contributors to Job Burnout

High-stress environments

Inadequate pay

Lack of understanding of job requirements

Lack of work-life balance

Unpredictable schedules

Monotonous or repetitive tasks

Reduce Burnout Through Healthy Scheduling

Working in the Hospitality Industry Leading to Burnout? Try This Simple Scheduling Trick! - YouTube

It’s really no wonder that people who work in an industry focused on treating others with the utmost kindness and respect, tend to put themselves last.

The result is an unhealthy industry that faces one of the highest rates of job-related burnout.

Building a Healthy Schedule

Let’s assume most of us are working off a schedule of some sort. Whether it’s a Google calendar or any other app (or paper), there’s a common but critical flaw with the system.

Most people focus on the events and tasks that must be done. Rarely do we intentionally take time for ourselves.

“In the event of an emergency put your own oxygen mask on first, before helping others.”

Step 1: Schedule personal recharge, or downtime for yourself.

Personal time is not the same as family time. Personal time is time for you to recharge you.

Maybe you schedule early morning workouts or mid-afternoon meditation time. Or perhaps, like Dave, you choose Sunday’s to hide out in the basement.

What matters is that you purposefully set time aside for yourself.

Step 2: Schedule Family “Obligations”

If you have a partner, spouse, or kids, it’s important for them to have you present in their lives.

We see a lot of venues that are 20 – 30% overstocked in back stock. That’s cash—your cash—that’s been converted to liquid assets.

That’s not necessarily the position we want to be in—we want our cash in the bank, especially in an industry that often struggles with cash flow issues.

We want that cash ready and available to support the business in whatever way possible.

Bar owners don’t need their cash sitting back in a stockroom, especially if that product is going to eventually convert into deadstock. Even postponing a purchase for a month or two gives you a simple way to leverage your cash-flow.

Simple, but important tips to free up more cash with your inventory.

Is Your Bar Overstocked? Convert Inventory to Cash! - YouTube

Stay On Top of Par Levels

We often find in businesses that people can’t keep up with manual par guides; using spreadsheets, etc. There’s no way you’re trending that week-over-week it just doesn’t happen—not with accuracy.

So within that context, what often happens is that we’ll see trends, especially because there’s such a proliferation of product out there, we’re getting hit with all this new stuff all the time, and certain products start to trend.

We definitely keep up with the ordering on those trends—when a product is popular, we’re happy to buy it, because that translates to revenue.

Using traditional methods, like spreadsheets, operators typically overlook what’s no longer selling like it used to, and they don’t take those pars down so they keep ordering inventory that has slowed down. But they’re still keeping pace with the new trends in the business, which means we end up overstocking.

Don’t Become a Destination for Other People’s Bad Ideas

We all tend to have enough troubles of our own; we don’t need other people’s problems. What does that mean?

Big distributors have all kinds of product in their warehouses and it’s not moving. It’s not moving for a good reason; either it didn’t get promoted well or it just wasn’t a good idea in the first place.

Whatever the reason, distributors need to move their product. So, suddenly, deadstock for them is a “great deal” for you.

Here’s an example: A client recently agreed to a “deal” to bring on 12 flavors of a particular vodka. 12 different flavors of a vodka that’s not on their menu.

Vodka they’ll never put on their menu, it’s never going to be asked for, there will be no demand and that stuff is going to be in their storage room for all time.

The client took this product in exchange for three or four cases of high-volume product that they will sell.

If you feel compelled to take a particular deal,

Make a better deal

Just tell the distributor, “I don’t need the stuff you can’t get rid of. If you want to give me a deal, give me a deal on stuff that’s relevant in my business.”

Make sure there’s some support behind it

It’s not your job to move their product.

Make a deal with your distributor that works for both of you; you accept their overstock, and they work with you to move the product inside your venue—and offer you a buy-back option.

It’s your job to move your product.

You’ve created a menu. You have an offering. Don’t get roped into taking on someone else’s problems.

The Purge

What if you’re already overstocked? Now what?

It’s a great opportunity to convert your back stock into cash. At a minimum, purge your overstock annually—quarterly is even better. You might use the Christmas holidays as an event to bring your customers into the experience. Explain and promote the idea that you have some interesting product in reserve that will be featured for a limited time.

Get the bartenders to come up with new cocktails

Use as gifts for VIP guests or staff

Stock at rest is stock at risk.

Don’t Be Afraid to Run Lean

It’s better for a business to run a little lean than a little fat. Don’t panic if you run out of a particular product. You’ll suddenly have an opportunity to introduce guests to a new experience, so you convert a negative into a positive. You could do that all day long!

One of the biggest opportunities in any given restaurant or bar is found in draft beer.

There are plenty of videos out there about maintaining glycol systems or how to pour a perfect pint—this isn’t one of them.

The opportunity we see most often deals with foaming beer.

Bartenders are Pouring Money Down the Drain

It’s a common practice—we see it all the time. Bartenders, in an attempt to pour a viable pint, just pour the foam (read: inventory) down the drain. Now, it doesn’t feel like pouring dollars down the drain, but that’s what’s happening.

A quick way to combat the foam is to pour it like a Guinness. Fill the glass to about 70%, then let it sit there for 30-60 seconds.

What to do during that 60 seconds?

Pour another draft

Create a cocktail

Start a conversation

Top off the pint

Serve it with a smile!

If we’re doing our job and staying ahead of the game, our guest isn’t out of beer. And if it’s the first beer, we’ve greeted them within 30 seconds, welcomed them to the venue, and they can see us pouring the beer.

If you’re engaged, and they can see you’re attentive to their needs, customers don’t mind waiting a few seconds—they just don’t want to be ignored.

Tip #2: Match the Draft Lines for Efficiency

Something we’ve learned by working with thousands of venues is that not all lines pour exactly the same. Now, if you have a great system, it’s likely you won’t experience this problem—but if you, like many operators, have some lines that just don’t pour right—or pour inconsistently, you can make some adjustments.

Put the high-volume products on the best performing lines

Move ciders and nitrous to lines that chronically give you problems

Works like a charm!

Tip #3: “86 it!”

True Story: A client was experiencing some disruption with kegs in their business. It was Friday night and they were slammed—and they just poured foam through two full kegs trying to manufacturer some pints.

They ended up pouring 50 pints out of one 1/2 barrel, and about 70 out of another.

So basically 50% of those two kegs went right down the drain!

Can you imagine a world where you’d pull $130 -$140 out of the cash drawer, rip it up and throw it out?

That’s basically what happened. It was as effective as lighting that money on fire. And you say, “Hey look, we’re trying to get the beer out for Friday and Saturday night” which sounds reasonable on the surface—but now you’ve created a problem for the Monday and Tuesday guests.

Don’t subscribe to the idea that your best option is to pour your inventory, i.e., cash, down the drain.

You lose on both sides of the equation.

“86 it” and get people into some other products. You have substitutes and bottles available— people will survive that.

Bonus: Why does that happen?

Why do we have this mindset that it’s okay—in fact, acceptable— to pour inventory down the drain?

It’s because a lot of people, from a financial standpoint, don’t actually know what’s going on in their draft program

If you’re not using scales or some version of an inventory program, you simply can’t know.

It happens all—the—time, and it looks something like this:

The bar manager or bartender does a count by going into the keg room and sloshing the keg around. Then they say, “That’s 50%, that’s 70%, that’s 10%.

You come back and run the draft numbers, and based on the reported count, your draft program is at 34% cost— People don’t report that number.

They go, “Oh! I might have been feeling a little strong today! I think there was more beer in there than I thought!”

Solution? Just magically add 10% to all the kegs, now the draft program is at 23%.

Ah, that’s better. Good. Turn that in.

Really?

It happens. All. The. Time.

So if you’re not reconciling your true inventory— by weighing your kegs—and you’re not reconciling that against your draft sales, you really don’t know what’s going on in the draft program. That’s why people walk by foam being poured down the drain and just allow it to happen. What other reason would there be to allow such waste in a business without it being questioned?

Make sure you get real data— measurable data— in your draft and keg program. If you need help with that, hop on over and check out our inventory control services here.

Culture is the fabric for everything that our businesses are, and I want to take you on a journey today in a way that’s outside the traditional restaurant and bar space, yet still within the hospitality industry.

So, if you live in the south, you’ve seen it— a company called Chick-fil-A. It’s spread like wildfire across the U.S.

They are absolutely on fire!

I found myself going there almost on a daily basis—for a fast-food chicken sandwich!

Now, I love a good chicken sandwich as much as the next guy, but I can get a chicken sandwich almost anywhere, so why the fascination with this joint?

And the lines!

There’s no time of day when they’re not busy—it’s just a matter of HOW busy it will be!

During lunch and dinner hours cars are lined up, double and triple stacked in the drive-thru lanes—there’s even a traffic cop in the parking lot during the lunch hour!

It’s bananas!

Chick-fil-A is robbing the fast-food industry! Here's how: - YouTube

So I’m sitting in line, and there’s— I don’t know—15-20 cars in line waiting for fast food that we’re not getting fast!

Meanwhile, right there, across the street is another fast food joint—with nobody in line.

No. Body.

You can go right there and get your food right now yet people are choosing to sit in line to get the stuff!

What’s the deal?

Culture Differentiates You from the Masses

When you’re sitting in that line, you’re not just sitting there—like with other drive-thru places—waiting to yell your order into a giant crackling speaker.

No. Chick-fil-A has people strategically placed to move you through the line.

Like, one of six people will personally take your order. Laminated menus and friendly smiles at the ready.

And then you drive around the corner and there’s a dedicated person to take your money. They’re in uniform, with a little credit card processor and a change belt handy.

In each of these transactions, they seem to capture this essence—like it is absolutely their pleasure to take care of you. And when you get to the drive-through window, some nice person hands you your bag of food and says, “Have a nice day!” and they seem to mean it.

People are happy—they’re authentic.

It’s absolutely amazing!

And then I look across the street. In my mind I’m thinking, “There’s a group of people over there, looking at these people, going ‘Thank God I don’t have to work that hard!”

Hence, there’s nobody in their drive-thru and nobody’s making the adjustment!

It’s almost un-American not to be making this adjustment!

I mean Chick-fil-A is absolutely robbing the fast food industry of its revenue!

They’ve cracked the code.

But wait—there’s more! Sometimes I decide to take a break and go inside.

Again, I’m always greeted kindly, always with a smile. People are authentically happy to serve. I get my drink— the food may not be ready because, of course, there are busy as all hell, and I go sit down, and then some nice old lady brings out my food.

She acts as if it’s the most awesome thing in her day! Five minutes later she comes by and takes my tray and asks if she can get me a refill of sweet tea!

I’m coming back over and over and over again. And for the longest time, I didn’t know why.

FREE Guide: Building a Culture of Great Service

What Happens With a Shift in Culture

Chick-fil-A’s been around since 1946.

It hasn’t always been like this—there was a Chick-fil-A in the mall where I grew up.

This is what happens when you really crush culture. And when the culture you create in your business is all about that guest experience, and it’s differentiated from anything else you can get out there, you win and you win big!

How Did Chick-fil-A Take Over the World?

S. Truett Cathy was the original founder. His son, Dan, is now the CEO with over 2200 locations.

Half the people that now work for Chick-fil-A were hired since Truett Cathey’s death in 2014, so this culture brand has taken off since his passing.

Here’s a quote from Dan Cathy:

“How can we distinguish ourselves not just with the taste of our menu items, but in terms of really being customer-centric and customer-focused, through honor, dignity, and respect?

People today are even more starving for that than they are for a Chick-fil-A sandwich.”

And that, to me, was the A-ha moment.

It’s not the Chick-fil-A Sandwich—even though it’s good.

It’s not the sweet tea, and it’s not the waffle fries.

That’s all good, but that doesn’t make you sit in line for eight and a half minutes when you could get fast food, over there, right now.

“Culture is what happens and how your staff behave when you’re not there.”

What Does This Mean for the Bar and Restaurant Business?

All these same rules apply for us as much, if not more than Chick-fil-A.

You may want to ask yourself:

Do you have a culture?

Can you define it?

Does your culture represent your values?

Does the culture represent your vision for the business, or are those two separate?

There are a lot of owners out there who have a vision of what they want, but there’s a disconnect in how the business actually performs.

You’ve got to close the gap.

Are you able to cast your vision?

Are you able to enforce your vision and fight for the vision and culture that you want for your business?

How does your business behave when you’re not there?

What Will Be Your Legacy?

Half the people that work for Chick-fil-A now didn’t work there when Truett Cathy was at the helm. I can’t tell you how active he was in his later years, but look at how the business is performing since his passing.

What a powerful statement it is that the culture not only maintained but improved; that it magnified and amplified and is turning into this amazing experience with incredible business results.

The final question I would ask is:

What’s your legacy?

Bars and restaurants have lots of legacies, history, and memories.

What are you going to be known for?

I just found this to be a fascinating study. As I said, I’m in that drive-through almost on a daily basis, and I watch the lack of adjustment, and the lack of learning from the competitors, and what Chick-fil-A has done from a cultural perspective to really drive results.

It blows me away.

How the people behave in the business, to me, is a direct reflection of what their founder would have wanted for the business all those years ago so.

Download Your FREE Guide: Building a Culture of Great Service

Are you doing that work?

If you need help doing that work, you can reach out to us.

That’s something that we do. We love culture building!

Dave Domzalski and I just wrote a book, The Bar Shift. If you’re looking for a book that has more content like this, you can visit us at TheBarShift.com.

Barmetrix COO Ray Walsh had the opportunity to speak with “the Dave’s” recently.

41 Management Lessons You Don’t Have to Learn the Hard Way

The Bar Shift is an easy read—keep a copy in the bar area and in the office—make it accessible to everyone. You can flip through and quickly find answers for best practices, coaching your team, boosting revenue, outsourcing…the list goes on!